Ocado Group is a publicly-traded company that provides solutions for online groceries to retailers across the globe. Ocado Group undertook an initial public offering on the London Stock Exchange on 21 July 2010, and is a member of the FTSE 100 Index.
|Type||Public limited company|
|England, Wales, Spain, France, Canada, USA, Sweden, Australia, Japan|
|Services||Groceries, consumer goods|
|Revenue||£1,756.6 million (2019)|
|£(92.8) million (2019)|
|£(211.8) million (2019)|
Ocado Group was built off the back of its retail business in the UK, Ocado Retail Limited, which is a separate legal entity today. However, Ocado Group has evolved from a retail business to a technology company and it is claimed that it is valued more like the US technology company Amazon than its retail counterpart Tesco in the UK. On 21 November 2019, following the creation of a 50/50 joint venture company with Marks & Spencer (Ocado Retail Limited), Ocado was no longer required to call itself a grocer by the Competition and Markets Authority.
Ocado Retail Limited (ORL) or Ocado.com is Ocado Group's British retail partner and an online supermarket that uses Ocado Group technology and solutions. In contrast to its main competitors, the company has no chain of stores and does all home deliveries from its warehouses.
Ocado was founded in April 2000 as L.M. Solutions by Jonathan Faiman, Jason Gissing and Tim Steiner, former merchant bankers with Goldman Sachs. In October 2000, Ocado partnered with Waitrose. In June 2001, the company changed its name to Ocado Limited. In 2002, the company started its commercial delivery service.
In September 2006, Michael Grade became non-executive chairman of Ocado, shortly after Goldman Sachs were appointed as financial advisers, fuelling speculation which had already started about a listing for the company. In November 2008, the John Lewis Partnership transferred its shareholding of 29% into its staff pension fund. In May 2010, the John Lewis Partnership entered into a 10-year branding and supply agreement with Ocado. In February 2011, the John Lewis pension fund sold off its entire Ocado shareholding.
On 13 July 2009, Ocado released its first app for the iPhone. The app, called 'Ocado on the Go', allowed users to do their grocery shopping without a computer. On 19 April 2010, the company extended the app to Android devices. In 2015, Ocado launched the first grocery app for the Apple Watch.
In 2015, Ocado launched the Ocado Smart Platform, its own software for operating retail businesses online.
In August 2017, Ocado launched an app for Amazon's Alexa voice assistant, that allowed users to add products to an existing Ocado order or basket via voice command. The company stated it was the first UK supermarket to launch an app for Alexa.
In January 2018, Ocado completed negotiations for an Ocado Smart Platform deal with the Canadian supermarket chain Sobeys, owned by Empire Company. Michael Medline, CEO of Empire and Sobeys, said its e-commerce business, including robotics system for home deliveries, would start in approximately two years.
In May 2018, Ocado signed an Ocado Smart Platform deal with Kroger, the US retail company, to build up to 20 Customer Fulfillment Centres (CFCs) using Ocado's automated technologies. As of November 2019, five locations had been identified for the new CFCs, and two were under construction.
On 5 February 2019, Ocado's customer fulfilment centre (CFC) in Andover, Hampshire, which handles 10 per cent of its fulfilments, caught fire. The fire continued to burn the following day, engaging more than 25 fire engines and 300 firefighters from multiple fire services. A 500-metre exclusion zone was set up and residents as far as 1.6 km away were evacuated as a precaution. The fire burned for more than 3 days, with the roof collapsing in the process.
On 27 February 2019, Ocado and Marks and Spencer announced a Joint Venture, whereby M&S acquired a 50% share in Ocado's UK retail business.
In March 2020, Ocado warned of delays as customers were buying particularly large orders amid reports of panic-buying across the UK over fears of the coronavirus pandemic. On 18 March, Ocado announced that it was suspending its service, citing higher demand for deliveries than it was able to meet. On 29 March, the company said that they had spent £1.5 million on ordering 100,000 COVID-19 testing kits for its staff, with an aim to keep grocery supplies flowing. This was intended to protect both their staff and the UK public, but the company promised to hand them over to the NHS if required.
On 12 December 2020, Ocado raised its core earnings forecast for 2019-20 for the second time in two months as the COVID-19 pandemic continued to generate huge demand for home delivery.
Ocado Retail Limited's products include own brand groceries from the Marks and Spencer supermarket chain as well as their own Ocado brand, but also a selection of name brand groceries and other items, including flowers, toys and magazines. Until September 2020, Ocado sold Waitrose products alongside their own, however, the 10-year supply and branding deal signed in 2010 expired and Ocado began a joint venture with Marks & Spencer instead. Deliveries were temporarily suspended following a "surge in demand" when the venture was first announced.
Since January 2014, Ocado Group have provided the website, warehousing and delivery services for one of their main grocery rivals Morrisons supermarkets, allowing them to operate online using Ocado's network of depots to deliver Morrisons groceries to online customers. The fulfilment of Morrisons.com grocery website customer orders comes from Ocado's Dordon Customer Fulfilment Centre (CFC) in the Midlands, with deliveries brought to the customer's doorstep via Morrisons liveried fleet. Morrisons made an initial capital payment of up to £170m to Ocado to acquire the Dordon site and associated mechanical handling equipment, as well as a licence and integration fee. A further £46m was invested to expand Dordon in order to accommodate Morrisons range, integrate with Morrisons systems and establish a network of delivery spokes. On an annual basis, Morrisons pay service costs and a contribution to research and development expenditure.
Ocado Technology, a division of Ocado Group, designs most of Ocado's technology in-house, including but not limited to: website and apps; automated warehouses and robots; Machine Learning-based fraud detection and customer service systems; forecasting and routing systems. They describe themselves as specialists in: automation and robotics; big data and the cloud; web and app development; algorithms and smart optimisation; and discrete event-simulation.
Ocado's warehouses are built with a giant 3D grid structure inside, within which groceries are stored in crates. On top, robots (over 1,000 per warehouse) coordinate in swarm-like behaviour to collect and move the crates. The robots bring the crates up from the grid into their interior and take them to pickers so the groceries inside the crate can be packed into orders. They then move the crate back into the grid. The robots can work together to 'dig' for the crates, moving crates out of the way to collect one buried lower in a stack. The movement of the robots and the storage location of the crates is managed and optimised by a central 'control system' using Artificial Intelligence. In this way, Ocado can pick a 50 item order in minutes.
These 'hive' style warehouses are located in Andover and Erith. The Erith site is 36 acres, capable of processing 220,000 orders a week, with up to 3,500 robots running on its grid. Ocado's older warehouses, located in Hatfield and Dordon, are based on a complex conveyor system and use Artificial Intelligence to plan and optimise picking sequence, product location, and crate routing.
Ocado Technology was involved in two EU-funded Horizon 2020 robotics research projects: SecondHands and SOMA and continues to experiment with robotics for automating picking and packing of grocery orders.
In November 2020, Ocado announced the acquisition of two United States' robotic start-up firms. Ocado acquired San Francisco-based robotics firm Kindred Systems for $262 million and Las Vegas-based firm Haddington Dynamics for $25 million as the supermarket retailer looks to "accelerate delivery, innovate more and grow faster," according to CEO Tim Steiner.
Ocado Smart PlatformEdit
The Ocado Smart Platform is Ocado's hardware and software platform for operating retail businesses online. It is this side-step from being a UK grocer into becoming a global technology provider that has seeded some analysts predictions of a £100 share price by 2030 Clients include the following supermarket chains: Morrisons (UK); ICA (Sweden); Group Casino (France); Sobeys (Canada); Kroger (USA) and Bon Preu (Spain).
The Ocado Smart Platform (OSP) is the organisation's 'suite of solutions for operating online grocery businesses'. The platform supports retailers with webshop, mobile applications and voice ordering for their end consumers. Ocado Group’s physical warehouses called “Customer Fulfillment Centres” (CFC) are also part of the smart platform along with the store pick technology that it sells to its partners.  OSP also supports last mile technology which includes fleet management, routing and delivery planning.
Ocado Group claims that the platform was created at an “intersection between six disruptive technologies: AI, Robotics, Digital Twins, Cloud, Big Data, and IoT. Ocado Group’s proprietary technology is protected by over 200 patents.
Retail Technology PartnershipsEdit
Morrisons bought capacity and logistical support from Ocado’s fulfilment centre in Dordon, UK in May 2013. The terms of this deal were altered in 2016 when Morrisons ended the exclusivity deal it had with Ocado Group allowing it to pick orders from areas outside of which Ocado Group operated. The new deal also saw Morrisons purchase capacity in Ocado Group’s fulfilment centre in Erith, UK. The relaxed exclusivity agreement meant that Ocado Group could enter into deals with other UK retailers.
In June 2017, the Catalan retailer Bon Preu Group partnered with Ocado Group which saw the retailer expand its home delivery and click and collect service. Ocado Group also agreed to provide Bon Preu with a dark store pick solution.
In November 2017, Ocado Group unveiled a partnership with the French retailer Groupe Casino. Ocado Group agreed to provide Casino with a fulfilment centre automated using Ocado’s proprietary technology. As part of the deal Ocado Group also agreed to provide Casino with a webshop and mobile application functionality along with last-mile routing technology. In March 2020, the Casino’s fulfilment centre went live in Fleury-Mérogis near Paris.
Ocado Group signed another international deal with the Canadian retailer Sobeys in January 2018. The deal will see Ocado Group build an automated warehouse in Toronto. Ocado Group will provide front end website functionality and last-mile routing technology. In May 2019, Ocado Group announced that they would build a second fulfilment centre for Sobeys in Pointe-Claire, Montreal. In April 2020, Ocado Group launched Sobeys' Toronto fulfilment centre in Vaughen, Ontario.  Sobeys launched its online delivery service Voilà in the greater Toronto area in June 2020 which was powered by Ocado Group’s technology and fulfilment centre. On the 22nd of July 2020, Sobeys announced plans to accelerate the build of a further two CFCs with Ocado Group. The retailer also introduced the roll out of store pick with OSP in areas where CFCs wouldn’t have coverage or hadn’t been built. The rollout of Ocado Group’s store pick technology began in Nova Scotia at the end of summer 2020.
The Swedish Retailer ICA signed a contract with Ocado Group in May 2018. The agreement will see ICA switch to Ocado Group’s e-commerce platform and build an automated fulfilment centre in Stockholm.  The agreement contains an exclusivity clause in both Sweden and the Baltic countries.
Ocado Group’s entry into the United States came in May 2018 when it announced an agreement with Kroger in May 2018. On the 30th of October 2018, Ocado Group announced the terms of that agreement, providing Kroger with 20 automated fulfillment centres.  Kroger agreed to purchase a 5% stake in Ocado Group as part of the deal.  The deal was hailed as “transformational” for Ocado Group due to the number of automated warehouses that the business would construct for its US client. Ocado Group saw its share price climb by 44% after the deal was struck. Ocado Group has announced 9 locations for Kroger fulfilment centres which include; the Great Lakes, Pacific Northwest, West Regions, Monroe, Frederick, Pleasant Praire, Groveland, Forest Park, and Dallas.
Ocado Group signed another major deal with Australian retailer Coles in March 2019. The deal will see Ocado Group build two customer fulfilment centres for Coles in Sydney and Melbourne respectively.
On 27 February 2019, Ocado and Marks and Spencer announced a Joint Venture, whereby M&S acquired a 50% share in Ocado's UK retail business. On the 5th of August 2019, announced the completion of the sale of its retail business which became “Ocado Retail Limited”. Whilst Ocado became a separate legal entity called “Ocado Group”. The joint venture is supported by Ocado Group’s solutions business and the provision of branding and products from Marks and Spencer. Ocado Group will also provide 3rd party logistics services for the operation of CFCs and driver management commanding a fee from the JV.
Ocado Group announced that on the 29th of November 2019 that it would partner with the Japanese retailer Aeon. Aeon will launch a new online business through Ocado Group’s e-commerce platform. The agreement will see Aeon and Ocado develop a national fulfilment network across Japan which Aeon expects to have a sales capacity of 600bn JPY by 2030 and 1 trillion JPY by 2035.
In May 2019, Ocado Group announced it had acquired a minority stake in the robotics startup Karakuri, a company that Ocado Group said had “the potential to revolutionise the preparation of ready to eat meals”. Ocado Group CEO Tim Steiner commented that “Our investment in Karakuri, potentially a game-changer in the preparation of food-to-go, gives us the opportunity to bring the best of innovation to the benefit of our own customers as well as those of our partners”. In June 2019, Ocado Group invested in the vertical farming sector announcing a three-way joint venture with 80 Acres and Priva which will operate under the name Infinite Acres. Alongside this, Ocado Group also made a “complementary” investment in Jones Food acquiring a 58% stake in Europe’s largest operating vertical farm. And Ocado Group invested in Inkbit in November 2019, which is the developer of a "3D printer driven by vision-based feedback control and artificial intelligence".
In June 2019, Ocado Group announced intent to use robotic packers to handle its stock, utilizing technology developed in collaboration with SOMA, the Soft Manipulation consortium.
On the 15th of October 2020, Ocado Group announced that it would acquire a minority stake in Myrmex Inc. a robotics company which specialises in autonomous mobile robots and intelligent asset handling systems.
The foundation is the part of Ocado Group which supports charity and fundraising activities across the UK. In 2019 the foundation activity equated to over £55,000 for charities and community organisations. The foundation is one portion of Ocado Group’s corporate responsibility strategy with initiatives which span education, entrepreneurship, environment and eating well campaigns.
Jez Frampton, CEO of Interbrand and non-executive director of Ocado, claims the name "Ocado" is "a made-up word, intended to evoke fresh fruit". Neil Taylor, an Interbrand consultant, stated that the name was a variant on the avocado fruit.
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